Pfizer 2016 forecast disappoints

The Pfizer logo is pictured on the company's World Headquarters building in the Manhattan borough of New York November 23, 2015. REUTERS/Brendan McDermid

The company’s shares fell slightly even though soaring sales of pneumonia vaccine Prevnar and recently approved breast cancer treatment Ibrance led to a stronger-than-expected fourth quarter.

Pfizer, which plans to buy Botox maker Allergan Inc (AGN.N) in the second half of this year, said it expected earnings of $2.20 to $2.30 per share in 2016. That would not be much different from 2015 and falls short of the analysts’ average estimate of $2.36 compiled by Thomson Reuters I/B/E/S.

Pfizer attributed its cautious 2016 outlook largely to the stronger dollar, which hurts the value of sales outside the United States. It forecast 2016 revenue of $49 billion to $51 billion, up from $48.9 billion in 2015 but shy of Wall Street expectations of $52.49 billion.

Tony Scherrer, director of research at Smead Capital Management, said Pfizer shares would eventually benefit from new products and acquisitions.

In the meantime, he said: “If anyone is looking for high and consistent cash flow, and strong profit margins, Pfizer has it.”

Pfizer’s forecasts do not include the planned $160 billion Allergan purchase.

Pfizer said on Nov. 23 that it would buy Allergan to slash its U.S. tax bill and obtain faster-growing medicines.

Based in Dublin, the combined company’s tax rate would be 17 percent to 18 percent by 2017, well below Pfizer’s current 25 percent rate.

Allergan shares are trading at about a 17 percent discount to their value under the all-stock deal as some investors still fear the U.S. government could stop the deal.

But Chief Executive Officer Ian Read, in a conference call with analysts on Tuesday, said he still expected Pfizer to complete the merger as planned.

Fourth-quarter revenue rose 7 percent to $14.05 billion, beating the analysts’ average estimate of $13.56 billion. Sales were bolstered by medicines from Hospira, a hospital products company acquired in September.

Global vaccine revenue rose 45 percent to $1.92 billion, with Prevnar sales doubling in the United States, amid increased use by adults and the timing of government purchases of the product for children.

Excluding special items, including costs from acquisitions and restructurings, the company earned 53 cents per share, topping the analysts’ average estimate of 52 cents.

Reporting by Ransdell Pierson; additional reporting by Ankur Banerjee in Bengaluru and Caroline Humer in New York. Editing by Lisa Von Ahn